Correlation Between Xtrackers LevDAX and Deutz AG
Can any of the company-specific risk be diversified away by investing in both Xtrackers LevDAX and Deutz AG at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Xtrackers LevDAX and Deutz AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers LevDAX and Deutz AG, you can compare the effects of market volatilities on Xtrackers LevDAX and Deutz AG and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Xtrackers LevDAX with a short position of Deutz AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers LevDAX and Deutz AG.
Diversification Opportunities for Xtrackers LevDAX and Deutz AG
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Xtrackers and Deutz is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers LevDAX and Deutz AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutz AG and Xtrackers LevDAX is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Xtrackers LevDAX are associated (or correlated) with Deutz AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutz AG has no effect on the direction of Xtrackers LevDAX i.e., Xtrackers LevDAX and Deutz AG go up and down completely randomly.
Pair Corralation between Xtrackers LevDAX and Deutz AG
Assuming the 90 days trading horizon Xtrackers LevDAX is expected to generate 0.83 times more return on investment than Deutz AG. However, Xtrackers LevDAX is 1.21 times less risky than Deutz AG. It trades about 0.15 of its potential returns per unit of risk. Deutz AG is currently generating about -0.03 per unit of risk. If you would invest 17,726 in Xtrackers LevDAX on September 12, 2024 and sell it today you would earn a total of 3,204 from holding Xtrackers LevDAX or generate 18.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers LevDAX vs. Deutz AG
Performance |
| Timeline |
| Xtrackers LevDAX |
| Deutz AG |
Xtrackers LevDAX and Deutz AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers LevDAX and Deutz AG
The main advantage of trading using opposite Xtrackers LevDAX and Deutz AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers LevDAX position performs unexpectedly, Deutz AG can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Deutz AG will offset losses from the drop in Deutz AG's long position.| Xtrackers LevDAX vs. UBS Fund Solutions | Xtrackers LevDAX vs. Xtrackers II | Xtrackers LevDAX vs. Xtrackers Nikkei 225 | Xtrackers LevDAX vs. iShares VII PLC |
| Deutz AG vs. Entravision Communications | Deutz AG vs. CNVISION MEDIA | Deutz AG vs. Seven West Media | Deutz AG vs. Computershare Limited |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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